Sunshine in Startup Loss

The Indian marketplace has undoubtedly evolved over the last decade. Key government initiatives towards digitisation of the country including massive penetration of internet to rural areas have facilitated deep connect with rural and semi-urban areas. A growing economy and rising consumption have boosted e-Commerce revolution over the past few years ever since this space grew roots in India.

With the boom in startups and growth of entrepreneurship in the country, companies today have to aggressively communicate with consumers and woo them, in order to gain early mover advantage and survive competition. Needless to say, advertising and deep discounting of goods and services are by far the biggest reasons for burning cash raised through painstaking funding efforts. 

As sceptics debate with disdain and cynicism about looming losses accrued by Indian startups, it may well be pertinent to ponder and introspect. Are there any real benefits out of loss making startups ?

Agility in Business 

The classical model relies heavily on bootstrapping to operate business. Needless to say, it is quite a slow process. Today, startups have the luxury of getting access to gobs of funds from investors and venture capitalists. Products are launched even before amortisations are planned. This is great news for customers as they experience greater value and convenience. For instance, Indian cab-aggregator service Ola run by ANI Technologies, today is the country’s largest ride-hailing app as it bridges gap between cab owners and commuters. It has made a marked difference in the lives of so many people.

Agility in business undoubtedly results in getting consumers access to products and services at a rapid pace. A great boon for customers! 

Globalising Brand India 

Many Indian startups work today on the philosophy wherein loss is viewed as profit in opposite direction. All investments are made in building corporate brand based on the belief that they will start paying off when scale of operation grows large and customer base turns profitable. Hence Indian startups have their eyes set on global expansions as well. Many startups like Zomato, Inmobi, Wittyfeed are already looking beyond home turf into overseas markets as umpteen opportunities await to be explored.  

Though statistics today reveals that Indian startups (including the successful ones) allow themselves to be sold at the earliest opportunity to global players, this will however evolve in the long run as these startups make global acquisitions through their own Indian brands.

Time awaits for Brand India to get truly global!

Boosting Mergers & Acquisitions 

India is a large, yet relatively untapped market that is growing rapidly on the wave of rising smartphone adoption and affordability of mobile internet. The huge potential of this country makes it an important market for any business looking to expand its global footprint. The Indian startup ecosystem has undoubtedly triggered the advent of number of foreign players over the years. This is an interesting phenomenon as FDIs keep pouring in. A positive trend, indeed! Acquisition of eBay India by Flipkart, Halli Labs by Google, Runnr by Zomato, Little and Nearbuy by PayTM are a few prominent news headlines in the recent past.

The news recently about acquisition of a majority stake in Indian eCommerce unicorn Flipkart by Walmart has been making waves and it is the hot topic of discussion and debates today. Undoubtedly, the Flipkart acquisition by Walmart is by far the biggest ! A great opportunity to drive innovation, develop enhanced processes and growth of Indian economy. 

Would acquisitions prove to be game changers for Indian startup ecosystem? 

Intrinsic Value to Nation & Customers 

As Indian startups compete to create loyal and broad customer base, the race has begun to build and deliver more and more value and convenience to customers, at a rapid speed. For instance, it is remarkable to note the power of e-Commerce in creating integrated value chains in the country, leading to growth of an entire supply chain ecosystem. While on one hand, eCommerce companies deliver value to customers and suppliers, there is visible growth in ancillary industries like packaging, logistics and warehousing, on the other end. These ancillary industries are increasingly becoming more organised and mechanised while retaining ability to hire skilled and unskilled labour.

The acquisition of eCommerce bigwig Flipkart by US retail giant Walmart also has multifaceted dimensions.The Indian online retail marketplace can leverage the best practices of sourcing at Walmart to expand access to many supplier groups.

The merger can also boost employment creation in the country given the huge number of people employed in retail industry including logistics, delivery, warehousing and other back office operations.

Additionally, Walmart Labs can play a significant role in driving innovation by leveraging technology and analytics to develop global solutions in India. A great way to make India a tech-enabled knowledge hub and incubator of global trends. There are also talks about a $3 billion push to Flipkart by Walmart. Indeed, positive signals for the country! 

As the maze of Indian startups strive to prove as valuable assets in the global economy in terms of long-term potential, they can certainly benefit from the continual race for global dominance. Access to huge customer base of Indian marketplace is the USP of many of these loss making startups. With startups working towards getting their unit economics right, the picture looks bright and encouraging. 

Well, this may be the opportune time for loss making startups to make hay while the sun shines!